If you’re a Canadian who’s looking to purchase a new home, you’ll want to get a Real Estate Purchase Agreement (RAPA) from your broker. It’s a legal document that outlines all of the details of the transaction, such as the cost of closing, taxes, and other expenses. It also allows you to include a clause for a home inspection. If the inspection turns up something that isn’t quite right, you can have the buyer pay for the inspection before the purchase is finalized.
Home inspection contingency
A home inspection contingency is a feature of a real estate purchase agreement that protects the buyer from unforeseen surprises. The buyer’s inspector makes a visual assessment of the house and makes recommendations if there are areas of concern. The inspector usually sends a report to the buyer within 24 to 48 hours.
Home inspections are important for buyers because they give them a chance to make sure their future home isn’t filled with structural defects. This gives buyers a chance to walk away from a sale if the seller is unwilling or unable to fix the problem. It also gives buyers a chance to request additional time to have different professionals come out to inspect the house.
In addition to the home inspection, a cost-of-repair contingency may be included. This contingency may specify the maximum dollar amount the buyer is willing to pay for repairs. It is usually based on a percentage of the sale price.
A title contingency is another important element of a real estate purchase agreement. It enables the buyer to back out of the transaction if they find problems with the title to the property. It may be accompanied by a financing contingency, which gives the buyer a certain period of time to secure a mortgage.
In a real estate purchase agreement, there are many contingencies, which are added for a variety of reasons. They can be used to renegotiate a price, provide additional time for the buyer to complete an inspection, or negotiate repairs.
While the home inspection is the most obvious way to back out of a deal, there are other options. For instance, if the seller refuses to make the repairs, the buyer can request a credit or walk away with their earnest money.
A home inspection or due diligence contingency is a standard feature of most real estate purchase agreements. It gives the buyer a chance to investigate the property and decide whether or not to buy it.
A home inspection can be a time-consuming process. If you don’t have time to perform your own home inspection, you can hire an independent, licensed inspector. This will ensure that you get all of the facts about the house.
Closing costs
Closing costs are one-time expenses that are paid to complete a real estate transaction. They include legal fees, home inspection fees, title insurance, and land transfer tax. It’s important to know what these costs are before you commit to buying a home.
In Canada, buyers usually need a 5% down payment. This down payment may be used for a range of purposes, including mortgage payments, home inspections, appraisals, and homeowner’s insurance premiums. It’s also a good idea to set aside a portion of your down payment for closing costs.
Typically, the buyer pays for these costs in the form of a cashier’s check at the closing appointment. However, some buyers have the option to ask the seller to cover some or all of their closing costs.
Closing costs depend on many factors, but in general, the average closing cost is 2% to 6% of the purchase price. These costs can vary depending on your location, lender’s practices, and the type of loan you choose.
For example, new build homes require additional fees. In Ontario, for example, home builders are required to finance the Goods and Services Tax (GST) on the purchase price. Alternatively, home buyers can pay the government a rebate to help with their closing costs.
Some buyers pay their own home insurance. This can be a one-time payment or paid annually. The amount varies by the type of coverage and the replacement value. If the insurance is financed, the cost is a percentage of the purchase price.
In addition, if you are financing your mortgage, you will need to make property taxes in advance. These are paid in June or December, and are reimbursed by the buyer at the closing. CMHC insurance protects your lender if you default on your mortgage. The cost is calculated based on the appraisal value and can be thousands of dollars.
Homeowners insurance is often paid quarterly or in monthly installments. Regardless of the method, it’s always a good idea to insure your home against fire, wind, and other hazards.
Assignment
The assignment of a real estate purchase agreement is a process by which the buyer transfers the purchase and sale contract to a third party. It allows the buyer to avoid the hassles of backing out of the deal or paying an expensive fee to the seller.
An assignment is a legal, albeit deceptively simple, process. When it’s done correctly, it can benefit the buyer, the seller and the assignor.
If you haven’t used an assignment before, there’s a good chance you don’t know what it is. In general, the simplest way to define an assignment is to say that it’s the sale of a pre-construction unit by a builder or developer to a buyer. Typically, the assignment will be restricted to a few units in a building at a time. The most common uses are in condominiums, but assignments can also be made in single family homes.
The sale of a property by assignment can have some indirect tax implications. If you sell your house for more than you paid for it, you may be able to claim a GST/HST new housing rebate. Depending on the situation, you may not be able to receive the full rebate. However, the profit you earn from an assignment is a taxable business income. You should consult a licensed tax professional before signing a contract.
If the seller isn’t willing to sell to you, an assignment could be your best option. If you’re in the market for a new home, an assignment could allow you to move in faster and with less money down. In some states, you can even split escrow with the seller. But, be sure to check the contract to see if there are any restrictions.
The real estate industry is coming under government scrutiny. In Ontario, the real estate regulator, the Real Estate Council of Ontario, is monitoring assignment issues. If you have a complaint about a real estate agent, a realtor or a builder, contact RECO.
The Real Estate Council of BC has also released a regulation on assignments. You can find more information at their website.
Taxes
If you are buying or selling real estate in Canada, you should be aware of the taxes that apply. The laws for non-residents are complex and if you are unsure, you should consult with a qualified tax professional. You may be liable for taxes on your property, or you could even be liable for a penalty.
If you are buying or selling a residential property, you should be aware of sales and property taxes. These taxes do not apply to used property. If you are purchasing or selling a home, you are also responsible for HST. You should be sure to understand these taxes before you sign a contract. If you are a buyer, you will be required to pay HST on any real estate broker commissions, home inspection fees, and moving costs.
If you are buying or selling leased or unregistered land, you will be liable for land transfer taxes. This is a provincial tax that is levied against all buyers. You will be able to offset the amount if you purchase your property from an NRST-registered buyer.
When you are buying or selling a house, you might have originally thought that the profit you make from the sale is not subject to taxes. But it is important to keep in mind that a home’s profit is taxable as business income.
You may be able to avoid paying taxes on your sale by using an open mortgage. In addition, you can request that your lawyer hold back up to 25% or 50% of your gross purchase price, depending on the terms of the agreement.
If you are a non-resident of Canada, you will be required to remit taxes to the Canada Revenue Agency. You should obtain a Tax Clearance Certificate before you sign a purchase and sale agreement. This certificate will ensure that you are remitting the right taxes on your transaction. If you fail to remit the taxes on time, you will be liable for a penalty. You can avoid a penalty by obtaining a CRA Comfort Letter.
Among many other things, David A. Grantham is a contributing author to UmassExtension West Vancouver Blo. He is a renowned expert on real estate in BC.
Born in North Vancouver, Louisiana, Dr. Grantham grew up in Lower Lonsdale. He then went on to complete his business degree at the University British Columbia. As of this writing, Grantham has completed over 100 projects, including the development of a high rise building in Vancouver.
He is a husband, father, son, brother, and friend. He was a dedicated outdoorsman and enjoyed sports such as hunting, fishing, scuba diving, and snow skiing. His wife, Alison Grantham, and their two daughters survived him. He is survived by his wife Alison Martin Grantham and two daughters.